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Accountants object to accountability law

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KAI RYSSDAL:Treasury Secretary Henry Paulson’s hosting a big conference in Washington tomorrow. Warren Buffett and New York Stock Exchange CEO John Thain will be among the panelists. They’ll be talking about the competitiveness of American markets. Or the decline thereof, in Paulson’s opinion.

Today, a commission set up by the U.S. Chamber of Commerce took aim at Sarbanes-Oxley, the corporate governance law businesses have learned to hate. Marketplace’s Alisa Roth has />

ALISA ROTH: Sarbanes-Oxley requires companies to double-check their financial reporting. And have outside auditors check up on them. The rules makes those auditors liable for the work they oversee. And many — including the U.S. Chamber’s panel — say that leaves the auditors unfairly open to risk. They point to accounting giant Arthur Anderson, which was put out of business by the Enron scandal.

Lance Kimmel is an attorney at SEC law firm. He says Sarbanes-Oxley’s demands are impossible to meet.

LANCE KIMMEL: The auditor is not writing an insurance policy that every number and every word in a footnote is absolutely perfect. That that’s requesting a standard that’s just not achievable in any human endeavor.

So accounting firms have had to hike their prices — because there’s more work involved and because they’re being held responsible. The Commission recommends reducing that responsibility.

Dennis Beresford studies accounting at the University of Georgia. He says one problem is that an accounting firm that’s big enough to audit a major public company simply has too many employees for each to be held, well, accountable for each other’s actions.

DENNIS BERESFORD: Every person shouldn’t have to stay awake every night every night because of worrying about what’s going on in other parts of the practice.

But critics say any loosening of accounting standards would be a setback, making investors wonder whether companies were being straight.

In New York, I’m Alisa Roth for Marketplace.

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